Working capital reduction
What is the size of the prize?
The key to achieving real improvements in optimising working capital is to ensure that line management own both the problem and the solution. If line managers feel that working capital is an issue for the accountants to sort out, no progress will be made: they won't own the problem unless they have a real understanding of the issue and what to do about it. In addition, conventional presentation of working capital data often takes the form of 'walls of numbers' with no emphasis on management action.
A 7 step process can be used to support the identification and achievement of quick wins in working capital reduction:
The same approach can also drive longer-term efficiencies once the monitoring techniques are embedded within the organisation.
What is the size of the prize?
The key to achieving real improvements in optimising working capital is to ensure that line management own both the problem and the solution. If line managers feel that working capital is an issue for the accountants to sort out, no progress will be made: they won't own the problem unless they have a real understanding of the issue and what to do about it. In addition, conventional presentation of working capital data often takes the form of 'walls of numbers' with no emphasis on management action.
A 7 step process can be used to support the identification and achievement of quick wins in working capital reduction:
- Obtain immediate access to the data
- Set out the business driver relationships
- Look at the trends
- Find the targets
- Calculate the potential savings
- Communicate the size of the prize
- Enable line management to monitor the outcome
The same approach can also drive longer-term efficiencies once the monitoring techniques are embedded within the organisation.
Client benefits
"This way of presenting things makes it hard for subsidiary managers to hide. The reports now point out the anomalies very starkly and they are required to explain them."
Exective Chairman, Global Insurance Broker
Exective Chairman, Global Insurance Broker